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Sentences to ponder
Overall, a $1 increase in prescription drug spending is associated with a $2.06 reduction in Medicare spending.
Here is the paper. I'm all for the view that the Bush Administration has been fiscally irresponsible, but I never thought the prescription drug bill was the ideal target. If there is one category Medicare should be supporting, it is prescription drugs.
On a related note, Robin Hanson believes that half of all medical care spending is a waste (do read the whole thing). I'm not sure what mechanism will get rid of the bad half, but Robin's claim deserves to be taken very seriously.
Posted by Tyler Cowen on September 11, 2007 at 07:24 PM in Medicine | Permalink
Comments
Only half? ;) I wonder how much is wasted in medical education. The hoops people have to jump through to practice medicine can be a bit insane, and unfordable for the vast majority of people. I'm all for having good doctors, but I don't care if my dentist is proficient in dissecting cadavers.
Anyone know if someone has written on if service licensing (such as medical licenses) can produce a cost/risk compromise that consumers prefer over the market's results?
Posted by: G at Sep 11, 2007 7:34:32 PM
Wow, my mind has changed. Yay prescription drug benefit. Actually, under Tyler's revenue-neutral proposal for prescription drugs, I think this means we can cut Medicare.
Posted by: Keith at Sep 11, 2007 10:23:30 PM
Wow, my mind has changed. Yay prescription drug benefit. Actually, under Tyler's revenue-neutral proposal for prescription drugs, I think this means we can cut Medicare.
Posted by: Keith at Sep 11, 2007 10:25:44 PM
Robin Hanson's claim seems right. Unfortunately, people are weak, and the self-discipline-type regimes required for true health-gains are probably too hard for people, so they resort to last minute band-aid-type medicine that costs a helluva lot more. Especially if these are subsidized. In The Netherlands you can get the government to pay for all kinds of non-medicine health related stuff such as relaxation spas in Switzerland and weight-loss programs, as long as the government licensed GP approves.
Posted by: ralph ruben at Sep 12, 2007 1:54:02 AM
Robin Hanson's claim seems right. Unfortunately, people are weak, and the self-discipline-type regimes required for true health-gains are probably too hard for people, so they resort to last minute band-aid-type medicine that costs a helluva lot more. Especially if these are subsidized.Well, most current health care plans provided by employers and HMOs have very low deductibles. These plans are subsidized by tax cuts and required by law. So people do not pay the full costs of their bad health. I don't think its unreasonable to conclude that people will take advantage of this and have less incentive to manage their own health. Its a classic prisoner's dilemma.
I don't think saying that people are "weak" is really telling much of the story. People will go to incredible lengths for things necissary for their own well-being. But they won't bother if they are expecting it to be subsidized at nearly any cost by a third-party payer. Staying in good health is a cost to people, its just a cost not measured in money, but lifestyle, diet, and other things.
Of course, it looks like health care is going to get far more managed and bureaucratic. I suppose if we are going that direction, we might as well do it as well as we can and reward preventative care. I don't think it will ever be superior to care managed by the patient and doctor, but that died decades ago and probably isn't coming back any time soon.
Posted by: G at Sep 12, 2007 9:03:06 AM
Regarding "people are weak," suppose that in the absence of the moral hazard noted above people still opt often for the ex post remedy rather than the ex ante preventive care. Is this still evidence for people's "weakness?" If you choose to risk repairing a blown engine in your car rather than change the oil regularly, we usually assume that this was an optimal choice and infer that your time costs of maintenance were especially high. We do not expect your objective to be to minimize car maintenance costs or to maximize car life, but to maximize utility. Does lack of self discipline mean that your are not pursuing my objective for you?
Posted by: MW at Sep 12, 2007 2:32:52 PM
This is a sad commentary on people. This would imply that if they had to pay for the drugs themselves the recipients did not think that they where worth the cost but if someone else was paying, you might as well take them. My parents (in their mid 80s) tell me that do not want to live much longer (They have filled out living wills and have made their wishes well known to family and friends.) and that most of their friends their age feel the same. I wonder how much of the other Medicare paid for care that older people get they only take because it is free and they are pressured by family and norms to take. (BTW I think the some things like Medicare can lead changes in norms that are sub-optimal.) What is the right amount of care? IMO it is different for each individual but absent that option, it should be the amount that the average the median income person would be willing to pay for themselves. How we could get there I haven’t a clue.
Posted by: Floccina at Sep 14, 2007 11:53:40 AM
The abstract seems to be saying that for every $1.00 Medicare pays for prescription drugs, other Medicare costs are reduced by $2.06. Therefore, Medicare saves money by having a prescription drug benefit.
"Medigap prescription drug coverage increases drug spending by $170 or 22%, and reduces Medicare Part A spending by $350 or 13% (in 2000 dollars) ... Overall, a $1 increase in prescription drug spending is associated with a $2.06 reduction in Medicare spending."
Posted by: Doug S. at Oct 15, 2007 8:26:42 PM
It never made sense to me that government subsidized some effective ways to get people well but not others. Surgery but not drugs? Nuts!
Probably the cheapest, quickest way to improve our health and save money at the moment is to disinfect hospitals and hospital workers and keep them disinfected.
Posted by: Larry at Oct 18, 2007 6:19:11 PM
Levitra (vardenafil HCl) is a prescription medicine that is indicated to treat erectile dysfunction (ED). Consistent with the effects of PDE5 inhibition, administration of Levitra with nitrates and nitric oxide donors is contraindicated. Caution is advised when PDE5 inhibitors, including Levitra, are used concomitantly with stable alpha-blocker therapy, because of the potential for lowering blood pressure. Levitra is not recommended for patients with uncontrolled hypertension (>170/110 mmHg).
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